U.S. parts suppliers likely to take biggest hit from GM job cuts: observers

TORONTO (CP) _ While Canadian suppliers may suffer from General
Motors' move to cut 1,200 jobs at an Ontario truck plant, U.S.
companies are likely to take a bigger hit because they provide many
parts used in assembling pickup trucks, analysts said Friday.

``It would be on the auto parts side of the equation where you'd
see the most significant changes, and most of that has American
implications,'' said Dennis DesRosiers, president of DesRosiers
Automotive Consultants Inc.

GM Canada ``imports most of the parts (for the pickup trucks)
from the U.S.,'' he said, adding that any impact would be very
specific to each supplier company's exposure to GM pickup trucks.

The GM closure affects the Chevrolet Silverado and GMC Sierra
pickup trucks, but follows thousands of cuts already scheduled as
the company pares its operations under earlier streamlining efforts.

``There's a good chance that most of the major suppliers in
Canada have some exposure to GM,'' he said, but added that ``if
there's going to be a fallout in the parts sector, it's going to be
the American supplier that will be hurt primarily.''

The Silverado and Sierra trucks are GM's best-selling products,
with one of every four vehicles GM produces being a pickup truck.
The redesigned trucks are built in Oshawa and assembled or slated
for assembly at plants in Fort Wayne, Ind., Michigan factories at
Pontiac and Flint and in Silao, Mexico.

The Canadian Auto Workers union estimates that the cutting of the
third shift at GM's Oshawa truck plant east of Toronto will result
in a loss of 8,000 jobs, citing a spinoff effect for related
businesses.

``Economic research over the years has shown that the spinoff
effects in total add up to about 7.5 jobs,'' said CAW economist Jim
Stanford.

``You have the job itself in the major auto plant, like Oshawa,
then you have about three jobs that are in the various supply
industries ... and then you have another 3.5 jobs that are called
downstream effects. Those are in the various consumer goods
industries that depend on the spending power of the first four
jobs.''

That means local doughnut shops, restaurants and home building
businesses may take a hit from the shift reduction _ and will likely
be hit harder than auto parts suppliers because the automotive
companies tend to produce parts for more than one vehicle.

``There are literary hundreds of companies that supply that
facility,'' Stanford said.

But ``with all the cross-border trade, it's hard to separate
exactly where those 7.5 jobs will be.''

The CAW is still working to figure out the full impact for
suppliers, but said Lear Seating in Ajax, Ont., is among the most
likely companies to be affected.

Woodbridge Foam Corp. in Whitby, Ont., is also likely to take a
hit, since it ships about 20 per cent of its output to the Oshawa
truck plant, said Chris Buckley, president of CAW Local 22 in
Oshawa.

AGS Automotive has a small degree of chrome bumper work for the
Silverado trucks, while U.S.-based Johnson Controls is also a
supplier.

AGS spokeswoman Lisa Boulton said it's too early for the company
to tell what impact the GM reductions will have on its business.

``We found about it (Thursday) the same way most people found out
about it,'' she said.

``We ship (bumpers for) Silverados not just into Oshawa but to
several other assembly plants in the United States and we need to
understand the overall impact and we haven't gotten that information
from GM yet.''

The layoffs are part of GM's plan to keep its inventory in line
with production and offset some of the value that was lost as a
result of incentive plans.

They come as tighter credit markets in the U.S. are making it
more difficult for American consumers to finance truck purchases,
and the slumping housing market in many U.S. states causes fewer
housing starts and a weakening construction industry _ a key buyer
of GM trucks for the job site.

GM Canada parent General Motors Corp. had announced plans to cut
more than 3,600 jobs in Ontario by 2008, as it worked to close nine
North American plants and eliminate 30,000 jobs over three years,
most in the United States.

As of the end of June, Canada's auto assembly employment was just
over 49,000, according the Statistics Canada.

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